Obama changing US approach on Africa to investment

Approaching his final two years in office, President Barack Obama is seeking to build a legacy in Africa by shifting the U.S. approach on the continent to investment from aid.

The son of a Kenyan and the first black U.S. president is playing host this week to the first U.S.-Africa Leadership Summit, where his administration says it expects more than $900 million in deals to be signed as part of a focus on development driven by private business.

“The importance of this for America needs to be understood,” Obama said at an Aug. 1 news conference. “Africa is growing and you’ve got thriving markets and you’ve got entrepreneurs and extraordinary talent among the people there.”

Trade and business, he said, “that’s the kind of relationship Africa is looking for.”

In welcoming 50 delegations to Washington for three-days of meetings beginning tomorrow, Obama is working to overcome perceptions on the continent that sub-Saharan Africa has been an afterthought for his administration. For the past five years, Obama’s foreign policy has focused on its heavily promoted pivot to Asia, crises in North Africa and the Middle East, winding down wars in Iraq and Afghanistan and, more recently, confronting a more assertive Russia.

Bush’s Initiative

By contrast, former President George W. Bush won praise for his initiatives in sub-Saharan Africa, including from Obama. The biggest part of that was a $15 billion commitment to prevent and treat HIV infections, known as Pepfar, and a $1.2 billion program to fight malaria.

Uganda’s ambassador to the U.S., Oliver Wonekha, and Ambassador Steve Matenje of Malawi, both Obama fans, said in interviews last week that Africans expect more from Obama, even as they appreciate the African initiatives he’s announced to date and understand that U.S. fiscal challenges and international crises have consumed his attention.

“This is a big thing for Africa,” Wonekha said of the summit. “We want investment. There isn’t enough investment coming from the United States.”

While calling Obama “an inspiration to many Africans,” Matenje said, “Maybe he needs to do more to help African countries.”

The summit “gives him an opportunity to show the continent that at the end of his term we will see a clearly defined legacy,” Matenje said. “That’s what we expect — that this will be a turning point.”

Obama’s Popularity

Obama remains more popular in Africa than he is at home, though that has waned since he took office, according to a Pew Research Center poll released last month.

Africans across seven nations said they have confidence in Obama, ranging from a low of 53 percent in Nigeria to a high of 78 percent in Kenya, according to the global poll that surveyed 48,643 people in 44 countries from March 17 to June 5. That’s down from 2010 findings of 95 percent confidence among Kenyans and 84 percent among Nigerians. His U.S. approval rating in a July Pew poll was 44 percent.

Africa — cited by the White House as home to six of the 10 fastest-growing economies — is ripe for expansion, Susan Rice, Obama’s national security adviser, said.

“A relative little goes a long way if it’s well targeted and well framed and if you leverage the private sector and foundations and civil society,” she said in an interview. “That’s a new model of development.”

Economic Growth

The World Bank projects a 5.2 percent growth rate for sub-Saharan Africa this year, driven by rising investment in natural resources and infrastructure, and strong household spending.

With the summit, Obama aims to institutionalize the move from a model of delivering aid to spurring development and trade as the main path for lifting Africans out of poverty.

Part of that involves helping nations become more attractive to investment by nudging African governments to adopt more inclusive human rights, including for girls, women and gays and establishing good governance. The U.S. didn’t invite leaders from Zimbabwe, the Central African Republic, Sudan or Eritrea, which aren’t in good standing with the African Union or with the U.S.

“He understands Africa for all of its potential and all of its magnificence but also he understands its warts,” Rice said. “His family members have lived them.”

Powering Up

Obama earlier unveiled initiatives to double access to power in six African countries and expand trade, food security and health initiatives, and his inaugural Mandela Washington Fellowship for Young African Leaders began last month.

The Power Africa initiative, which still requires action by Congress, envisioned a five-year $7 billion plan to double access to power in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania — singled out for good governance practices.

By bringing together 50 delegations to discuss ways to expand markets and investment, Obama wants to “create a precedent that future presidents will want to replicate.”

The summit also will give the U.S. a platform to discuss security and counterterrorism partnerships, Obama said, which “ultimately can save us and our troops and our military a lot of money if we’ve got strong partners who are able to deal with conflicts in these regions.”

‘Really Psyched’

Obama has been particularly moved by his interactions with young African leaders, aides said, including at a town hall event in Washington last week ahead of the leaders summit.

“I rode back to the White House with him after he participated in the town hall and he was just really psyched,” said Valerie Jarrett, the president’s senior adviser.

“What he said to me is, ‘Just imagine in 10 years what potential will be unleashed as a result of this initiative.’”

The centerpiece of the U.S. commercial relationship with the continent is the Africa Growth and Opportunity Act, which was signed into law in 2000 and is up for renewal next year.

It gives duty-free entry to the U.S. for almost all products from sub-Saharan nations that practice good governance. Thirty-nine of the region’s 49 countries qualify for benefits under the law, according to the office of the U.S. Trade Representative.

Imports covered under the law amounted to $26.8 billion last year, quadruple the amount in 2001.

Africa Trade

Most of the imports, 86 percent, were petroleum products. Nigeria, Africa’s biggest economy and its biggest oil producer was the main beneficiary with $11.7 billion in exports. Angola, another oil producer, was second with $8.7 billion in exports to the U.S.

On the other side, the U.S. sent $24 billion in goods to sub-Saharan Africa in 2013, an increase of 6.9 percent from the year before and up 250 percent from a decade ago, USTR figures show. Almost a third of those exports went to South Africa.

Sub-Saharan Africa still represents a small portion of U.S. trade, accounting for 1.5 percent of all exports and 1.7 percent of imports.

U.S. Trade Representative Michael Froman said the Obama administration wants to simplify the pact it and emphasize production in Africa, giving an opening to U.S. companies. That discussion will be part of the summit.

“We need to think through how our trade relationship with Africa might evolve from one built around a unilateral preference program to a more reciprocal set of arrangements over the medium and long-term,” Froman said in a July 29 speech at the National Press Club in Washington.

One of the U.S. goals, he said, is to ease “supply-side constraints,” primarily by assuring reliable energy, improved infrastructure such as roads and ports, and making sure products such as farm exports consistently meet standards.

“Given that Africa is home to the world’s fastest-growing middle class and six out of the top 10 fastest-growing economies in 2014, it’s easy to see why global companies like GE (GE), Caterpillar (CAT), and Procter & Gamble (PG) increasing view engaging with Africa not as a choice, but as a necessity,” Froman said.